Using a selection of charts from the GOLD CHARTS R US chart website, this monthly BullionStar series looks at some of the world's largest physical gold markets including Switzerland, China, Russia and India, and highlights recent developments in each market.

Shanghai Gold Exchange (SGE) Gold Withdrawals

Physical gold withdrawals from the Shanghai Gold Exchange’s network of vaults totalled 214.24 tonnes in September. Because nearly all gold trading and supply in China flows through the Shanghai Gold Exchange, these withdrawals are a suitable proxy for gauging wholesale gold demand in China.

Shanghai Gold Exchange

The delivery volume for September can also be seen below in a table extracted from the SGE's September Data Highlights report. See 2nd last line 'Withdrawal Volume'.

On a year to date basis to the end of September, 1504.63 tonnes of physical gold have now been withdrawn from the SGE's vaults across China, which when annualized would be 2005 tonnes. This could make 2017 the 3rd highest year on record for Chinese gold demand, but below 2013, and also below 2015’s record year when 2596 tonnes of gold was withdrawn from the SGE.

Chinese and Indian Gold Demand (CHINDIA)

With China and India as the 2 largest physical gold markets in the world, a gold demand chart combining the two is a powerful way of capturing the majority of physical gold demand across the world.

During August 2017, combined Chinese and Indian gold demand was estimated to be 205.7 tonnes. This estimate is based on 3 components, namely, monthly SGE gold withdrawals, monthly Indian gold imports, and also known changes in Chinese central bank official gold reserves. As Indian gold import figures are only officially released with a 2 month lag, the combined figure is always two months behind the current month, with the latest figure currently being for August 2017.

Gold Reserves of the Russian Federation

During September the central bank of the Russian Federation (Bank of Russia) announced that it had added a further 1.1 million ounces (34 tonnes) to its official gold reserves. This new addition leaves the Bank of Russia holding 1779 tonnes of gold, which is just 63 tonnes less that the Chinese central bank claims to hold (1842 tonnes).

Year-to-date, the Bank of Russia has announced additions of 164 tonnes of gold to its official reserves. As the Russians aim to add about 200 tonnes of gold to their reserves over the entire year, expect further Bank of Russia announcements between now and December confirming an additional 36 tonnes or so.

Transparent Gold Holdings

During October, the US dollar gold price was mostly range bound in the $1270 - $1280 range, only managing to break out temporarily on the upside during the second week of the month, where it breached the $1300 level. The price then retreated back to the $1270 - $1280 range and ended October at $1270.

The net level of physical gold holdings of a range of Exchange Trade Funds (ETFs) and other products that publish their holdings was relatively stagnant over October and is currently 1274 tonnes as of 31 October.

Gold-backed ETFs and similar product gold holdings: 12 months to October 2017

Swiss Gold Imports and Exports

According to Swiss customs statistics, Switzerland imported 159 tonnes of non-monetary gold in September, and exported 147 tonnes. October's import figure was nearly identical to each of the previous 2 months. Net imports were also positive for the third month in a row, suggesting a build-up of inventories at Switzerland's large gold refineries.

Swiss Gold Imports and Exports, monthly data, 2 year rolling to end of September 2017, Source:www.GoldChartsRUs.com

The largest sources of Swiss gold imports in September were Hong Kong, the UAE (Dubai), Thailand and the US. Together these four countries sent a combined 90 tonnes of gold to Switzerland, or 56% of the total. As neither Hong Kong, the UAE, not Thailand are gold producing nations, this suggests that the Swiss gold refineries are taking in both scrap gold and gold bars of various formats as source material for new refining and recasting.

The most notable feature of Swiss gold exports in September was that Switzerland sent 70 tonnes of non-monetary gold to the UK, or nearly half the month's total gold exports. As nearly all gold activity in the UK refers to the London Gold Market, it can be assumed that this 70 tonnes was destined for London's commercial gold vaults.

The London Bullion Market Association (LBMA) has recently begun to publish monthly vault holdings statistics for the gold held in its network of vaults, but this data is on a 3 month lagged basis, and will not show September's gold inflows from Switzerland until the data is published in early January.

Also notable in September's Swiss gold export data is that the usual recipients of the lion's share of Swiss gold, China, India and Hong Kong, only took in quite small quantities during the month, with 17.2 tonnes, 11.6 tonnes and 11.1 tonnes respectively. Arguably, this shows that during September, London received Swiss gold at the expense of the large Eastern gold export markets.

The final chart shows Swiss Gold imports and exports with the UK (London) over the last 6 years. Looking at the export flows, it can be seen that the last time Switzerland exported so much gold to London on a monthly basis was during a 7 month period in 2016. We will have to wait for additional Swiss customs data for October, November and December, to see if the large gold flows from Switzerland to London will continue for the rest of the year, or whether September was a one month anomaly.

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